The recent comments by Elon Musk regarding mining and its electricity consumption have reignited a multi-year debate. An interesting stance by Musk as Tesla bought $1.5 billion in Bitcoin recently. Finding new solutions to these problems may require looking into alternative consensus mechanisms, such as Proof of Stake or even Proof-of-Activity.
Elon Musk Swings Markets
No matter how people want to look at it, cryptocurrencies are volatile by nature. Unfortunately, this volatility seems to increase whenever an influential person decides to Tweet about Bitcoin. Elon Musk recently triggered a significant market crash by pointing out how Tesla will no longer accept BTC due to environmental concerns. An interesting stance, considering how Tesla bought roughly $1.5 billion in Bitcoin not that long ago.
The mining aspect of Bitcoin requires significant electricity, which some people may deem “wasteful”. Even though a significant portion of that electricity comes from renewable sources already, there is room for improvement. More importantly, it raises questions as to whether Proof-of-Work – the consensus algorithm requiring mining efforts – can be replaced with something more viable and environment-friendly.
A viable topic of debate, as other prominent networks rely on Proof-of-Work as well. Ethereum, Litecoin, Bitcoin Cash, and many others require mining efforts to secure the network. When combined, these networks require a ton of electricity to remain viable, which can pose significant threats to the environment. Proof-of-Work remains viable to address double-spending problems, but there may be other options to explore moving forward.
Finding Environmentally-Friendly Alternatives
Within the cryptocurrency community, there are attempts to create more viable solutions to Proof-of-Work. Proof-of-Stake, the consensus algorithm Ethereum will be changing to, can help alleviate some concerns. A near 7,000% energy requirement reduction is an appealing option to explore, even though no one knows precisely when this upgrade will roll out.
Another option to explore is Proof-of-Activity or PoA. It involves a group of publishers verifying microblocks by reaching a consensus. It is an algorithm that requires far less storage and communication resources, making it feasible for mobile devices. Even older generations of Android devices will not have any issue running a Proof-of-Activity node.
Moreover, one has to consider the possibility of Proof-of-Work potentially being harmful to autonomous devices. These devices have natural battery limitations, which can cause issues. Proof of Activity, on the other hand, is as energy-intensive as traditional messenger applications. A research paper regarding the energy consumption of Proof of Activity has no significant impact on the lifetime of a smartphone battery, whereas PoW-based methods will almost always negatively impact the device.
One blockchain incorporating Proof of Activity – combined with Proof-of-Work and Proof-of-Stake is Enecuum. With nearly 1,800 PoA nodes supporting the network – compared to 3 PoW and 23 PoS – the lion’s share of the network activity relies on the more efficient and “lightweight” consensus algorithm. Moreover, the majority of mining rewards are distributed to PoA mining, further emphasizing the focus on a more environmentally-friendly consensus algorithm.
It is evident the debate surrounding Proof-of-Work – or crypto mining – will rage on for some time to come. The recent comment by Elon Musk put an exciting spin on the current situation and one that requires immediate action. The formation of the Bitcoin Mining Council is a first step in the right direction, although tapping into other consensus algorithms may prove worthwhile as well.
Whether Proof of Activity can make a meaningful impact will depend on which ecosystems decide to implement it. Enecuum is ahead of the competition on this front. As discussions regarding electricity consumption become more prevalent, enforcing such a shift in consensus mechanism may prove essential.